Ohio Minimum Wage Amendment Imposes Significant New Burdens on Employers

November 30, 2006

On election day 2006, voters in Ohio amended their state constitution by passing Issue 2, the Ohio Fair Minimum Wage Amendment. Issue 2 includes sweeping changes for Ohio employers with regard to pay and recordkeeping practices.

Effective January 1, 2007, the minimum wage for Ohio workers will increase from $5.15 to $6.85 per hour, with annual increases thereafter gauged to the rate of inflation as determined by the consumer price index. The minimum wage increase applies to all employees working in Ohio, other than those under age 16 and those who receive tips. Tipped employees may be compensated at one-half the minimum wage, if the hourly rate of pay plus tips equals at least the minimum wage for all hours worked.

In addition to the minimum wage increase, Issue 2 mandates that Ohio employers establish and maintain detailed pay records for their employees. Ohio employers must provide all new employees with the employer's name, address, telephone number and other contact information and update that information, as appropriate. In addition, employers are required to maintain the following records for all employees (including salaried employees and those employees who are considered exempt from the overtime provisions of the Fair Labor Standards Act): name, address, occupation, pay rate, hours worked for each day, and each amount paid to an employee. These records must be maintained for the length of the employee's employment plus three years, which is significantly longer than the recordkeeping requirements set forth in the Fair Labor Standards Act.

Employers are required to disclose all of this information to any employee, or any person acting on the employee's behalf, upon request. Employers must provide the requested information at no cost to the employee. It appears from the Amendment that an employee can request the records of his or her co-workers, in addition to copies of the employee's own records. There is no stated limitation as to the frequency of such requests, and employers are prohibited from discriminating or retaliating against employees who exercise their rights.

Issue 2 provides both administrative and legal enforcement mechanisms for violations of the minimum wage and recordkeeping provisions. An employee, person acting on behalf of an employee, or any other interested party may file a complaint with the state to investigate possible violations. The state also has the power to initiate an investigation into possible non-compliance. Issue 2 also authorizes the prosecution of a legal action by an employee (or the attorney general) on his or her behalf or on behalf of similarly situated employees. The statute of limitations is three years from the occurrence of the violation or one year after the state has completed its investigation of an administrative complaint. A successful employee may recover back wages, damages (equal to two times back wages), costs and attorneys' fees. Damages for violations of the anti-retaliation provision are case-specific and must be “sufficient to compensate the employee and deter future violations.” The minimum damages for violations of the anti-retaliation provision are $150 for each day that the violation continued.

Issue 2 changes the landscape of recordkeeping and compensation practices of Ohio employers and is expected to produce significant litigation against employers, perhaps coupled with Fair Labor Standards Act (federal overtime) claims. To ensure compliance, all employers with employees in Ohio should conduct a comprehensive review of their payroll and recordkeeping practices prior to January 1, 2007.

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